Responsibilities of Directors in a Target Company in Mergers andAcquisitions

• Main Authors: Shih Yun Chang, 張詩芸
• Other Authors: Len Yu Liu
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/82312237948317378231

碩士 === 國立臺北大學 === 法律專業研究所 === 94 === To enhance competitiveness and management effect, enterprises in modern world usually take the strategy of mergers and acquisitions (“M&A”). This thesis begins by asking, “What responsibilities shall a director of the target company perform along the takeover proceeding?” Then, it tries to analyze and review the loopholes of regulations in Taiwan by case analysis and comparative law approach. Chapter II first introduces the position, rights and responsibilities of directors in companies of limited shares in Taiwan, and discusses the allocation of power and liability among board of directors, shareholders’ meeting and auditors upon transformation from shareholder-centered to director-centered jurisprudence. Despite that “board of directors” is the regulated subject in Company Act, respective “directors” shall be seen as one stipulated and necessary organ of business execution, enjoying certain power and liability. Next, Chapter III states directors’ responsibilities, originating from those of a fiduciary and developing into duty of loyalty and duty of care in the U.S., and compares them with relevant regulations regarding directors’ liabilities in Company Act and Enterprise Mergers and Acquisitions Act. Chapter IV discusses the meaning, origin, legal theory, requirements of application, effects of “Business Judgment Rule” and respondent regulations in the U.S.. Chapter V is the main part hereof, focusing on the responsibilities which directors of target companies shall perform in M&A and discussion respectively of agreed tender offer and hostile takeover proceedings in the U.S.. In agreed tender offer, directors of targets shall take five steps, which are “exercising the proceeding of enterprise valuation”, ”primary negotiation with acquiring firm”, “carefully dealing with due diligence performed by acquiring firm”, ”procuring opinions from independent professionals”, and ”performing market test.” In hostile takeover, this thesis regards that directors shall be entitled to determine whether to take defensive measures, and the key point is whether such measure is taken for the benefit of shareholders. In judicial review, the directors shall first prove said hostile takeover would endanger policy and efficiency of the company, and the defensive tactic taken would effectively eliminate such threat, before they could successfully refer to business judgment rule and be protected. To follow up, Chapter VI reviews the present regulations in Taiwan regarding directors’ responsibilities in M&A, and brings up five concrete suggestions in legislation and jurisdiction. Last but not least, this thesis takes one specific takeover case in Taiwan, the proceeding of which has been considered more rigid and cautious, and so examines it with reference to the aforementioned standards as proof.